Policy Ramifications of Industry 4.0

The Fourth Industrial Revolution or simply Industry 4.0, refers to the convergence of a set of disruptive technologies that will transform our world in the coming decades. From artificial intelligence (AI) to the Internet of Things (IoT) to autonomous vehicles (AV), the assortment of Industry 4.0 technologies promises to bring forth an era of hyper-automation and increased productivity. But as with almost every major technological innovation in human history, Industry 4.0 is also expected to have a dark side and if anything, signs of this dystopian future are already appearing.

But how might Industry 4.0 impact Singapore exactly? Since there is a dearth of systematic research on this question, we set out to answer it in our RSIS policy report published last month. In a nutshell, we found that Singapore should perform well even though it may have to grapple with a few unwanted consequences.

Specifically, Singapore will benefit from AI-enabled robotics for the simple reason that the country suffers from persistent labour shortages and these super-intelligent machines that demonstrate human cognition and abilities will one day more than make up for that deficiency. Unlike other economies that are heavily dependent on cheap labour, Singapore can expect to benefit much from AI-enabled robotics through increased automation. Furthermore, as the country undergoes rapid demographic ageing, these super-intelligent machines will not only augment its ageing workforce but also ensure that it remains competitive in the global marketplace.

It is worth noting that Singapore will turn into a super-aged society by around 2025. When that happens, one in five persons in the country will be aged 65 or above. For those Singaporeans who wish to remain productive in their later years, AI-enabled robotics will assist them in carrying out tasks typically performed by younger workers. But for those who wish to retire and age-in-place, IoT will help them to do so safely. Implemented as part of the Smart Nation initiative, many of these Internet-enabled technologies will make it possible for senior citizens to receive medical diagnosis, treatment and care in the comfort of their homes.

Photo credit: Tan Teck Boon

We also found that the advent of AVs on our roads will have a net positive effect. With just 14 minor accidents after close to two million miles on the road, Google's self-driving cars have shown that AVs can be as safe, if not safer than vehicles driven by us. Even though technical hurdles remain before AVs can be certified ready for the road en masse, a fleet of shared self-driving cars can be expected to slash the number of vehicles in Singapore by two-thirds. With fewer cars on the road, there will be less traffic congestion. Instead of more roads and parking lots, we can build more parks and housing.

Owing to the increased automation and productivity, Singapore should continue to thrive in the era of Industry 4.0. But there will be disruptions. There is no space here to discuss the range of negative ramifications but three are worth underlining not least because they are already happening.

There are indications that Industry 4.0 will herald a new era of digital insecurity as the vast number of IoT devices out there now are susceptible to digital intrusion and manipulation. Because many of these Internet-enabled gadgets are manufactured without digital security in mind, malicious actors will have little trouble hacking them. From these seemingly innocuous breaches, they may then gain unauthorized access to core networks and servers. In the worst-case scenario, they may even commandeer critical infrastructures, especially if they are operated over the Internet. If the security breach created by Meltdown and Spectre two recently discovered computer bug is bad (because they affect millions of computing devices in use today), then the situation will likely be much worse when billions of IoT devices come online.

Industry 4.0 will inevitably place cutting-edge dual-use technology in the hands of states, groups and individuals of all kinds. The self-styled Islamic State (IS) has for example, used commercial messaging apps featuring state-of-the-art encryption for secure communication and recruitment. Meanwhile, criminal groups in the UK have been found using drones to smuggle contrabands like narcotics into prisons. Additionally, we know now that low-cost 3D printer can be misused to fabricate firearms. As one might expect, this democratization of technology poses a serious challenge to national security not least because the authorities must now work relentlessly to develop viable countermeasures when none probably exists.

While this is happening, there is also a tightening of control over sophisticated technology by just a few tech giants on the other end of the spectrum. This consolidation of technological power in the hands of a few mega corporations is problematic. Take AI for example. Potentially an existential threat to mankind, the technology is largely controlled by a handful of Silicon Valley-based companies. In fact, the four most valuable companies today (by market value) are key players in AI research. Already pervasive in many aspects of our lives, imagine what these tech giants might become if they develop a technology that supersedes human intellect? What is worth underlining here is that this worrisome feature is not unique but rather common with Industry 4.0 technologies.

How might Singapore cope with the negative repercussions? There is no simple solution to how the country can be future-ready but briefly, the government can do three things to ease the disruption.

First, it needs to stay nimble so that it can react effectively to fast-changing circumstances. The rapid and relentless pace of change brought about by Industry 4.0 will mean that the government must be able to move fast and switch direction at a moment's notice not just to seize fleeting opportunities but also to quickly change course when a mistake is made. Notably, a nimble government is often associated with a less rigid decision-making structure. But as the decision-making process becomes decentralized, good governance also risks being compromised. As we enter the era of Industry 4.0, finding that right balance between good governance and agility will be important.

Second, the government needs to put in place a comprehensive strategy to tackle Industry 4.0's downside. A well-designed plan is important to have as it will force the government as a whole to think ahead and prepare for various contingencies. The outcome will be a government that is not only better prepared for an uncertain future but also one that is robust enough to deal with rapid and sudden shifts. Another benefit of having a comprehensive strategy is that it will keep various parts of the government focused on the challenges ahead and perhaps even cultivate an institutional mindset that supersedes their own immediate concerns.

But before the government can put in place a comprehensive strategy to tackle Industry 4.0's downside, it needs to fully understand what this profound technological shift entails. As always, engaging businesses and even academia will be useful in terms of appreciating the many nuances and unexpected challenges even though the process itself can be time-consuming. Fortunately, we are still in the initial stages of Industry 4.0 so there is still time to prepare. And the sooner we start preparing for it, the more likely we will be future-ready.